Grand River Drainage Dist. of Cass and Bates Counties v. Reid

• Decision Date: 17 December 1937
• Parties: Grand River Drainage District of Cass and Bates Counties, a Corporation, Appellant, v. A. Ives Reid, Treasurer and ex officio Collector of Cass County
• Court: Missouri Supreme Court

111 S.W.2d 151

341 Mo. 1246

Grand River Drainage District of Cass and Bates Counties, a Corporation, Appellant, v. A. Ives Reid, Treasurer and ex officio Collector of Cass County

Supreme Court of Missouri

December 17, 1937

Appeal from Cass Circuit Court; Hon. Leslie A. Bruce Judge.

Reversed and remanded (with directions).

L J. Bishop and Patterson, Chastain, Graves & Smith for appellant.

(1) The appellant is a drainage district and as such is a municipal corporation whose property is exempt from taxation. Sec. 6 Art. X, Mo. Const.; Sec. 9743, R. S. 1929; State ex rel. Caldwell v. Little River, Drain. Dist., 291 Mo. 72, 236 S.W. 15; State ex rel. Kinder v. Little River Drain. Dist., 291 Mo. 267, 236 S.W. 848. (a) The appellant, a drainage district organized under Article I, Chapter 64, Revised Statutes 1929, is a "municipal corporation" within the meaning of that term as used in Section 6, Article X, Missouri Constitution and Section 9743, Revised Statutes 1929, Sec. 6, Art. X, Mo. Const.; Sec. 9743, R. S. 1929; State ex rel. Hausgen v. Allen, 298 Mo. 448, 250 S.W. 905; Anderson v. Inter-River Drain. Dist., 309 Mo. 189, 274 S.W. 448; State ex rel. Gentry v. Curtis, 319 Mo. 316, 4 S.W.2d 467; Max v. Barnard-Bolckow Drain. Dist., 326 Mo. 723, 32 S.W.2d 583; Sigler v. Inter-River Drain. Dist., 311 Mo. 175, 279 S.W. 50; Houck v. Little River Drain. Dist., 239 U.S. 254, 36 S.Ct. 58, 60 L.Ed. 266, affirming 248 Mo. 373, 154 S.W. 739; Honey Creek Drain. Dist. v. Farm City Inv. Co., 326 Mo. 739, 32 S.W.2d 753; Mound City Land & Stock Co. v. Miller, 170 Mo. 240, 70 S.W. 721, 60 L. R. A. 190; State ex rel. Applegate v. Taylor, 224 Mo. 393, 123 S.W. 892; Mississippi & Fox River Drain. Dist. v. Ruddick, 228 Mo.App. 1143, 64 S.W.2d 306. (b) Generally as to construction of Section 6, Article X, Missouri Constitution and Section 9743, Revised Statutes 1929. The rule of strict construction of constitutional and statutory exemption provisions does not apply to provisions exempting property of municipal corporations. State ex rel. Waller v. Trustees, William Jewell College, 234 Mo. 299, 136 S.W. 397; Cooley on Taxation (4 Ed.), sec. 673; Pasadena v. Los Angeles County, 187 P. 418; State v. City of Columbia, 104 S.E. 337; Commonwealth v. Richmond, 81 S.E. 69. Said provisions should be construed in their plain, ordinary and usual sense. Sec. 655, R. S. 1929; State ex rel. Heimberger v. Board of Curators, University of Mo., 268 Mo. 598, 188 S.W. 128; State v. O'Rear, 277 Mo. 303, 210 S.W. 392; State ex rel. City of Marshall v. Hackman, 274 Mo. 551, 203 S.W. 960. The construction heretofore placed on said provisions by state administrative officials is entitled to great weight. Cooley on Taxation (4 Ed.), sec. 675; State ex rel. Koeln v. St. L. Y. M. C. A., 259 Mo. 233, 168 S.W. 589; In re Graves, 325 Mo. 888, 30 S.W.2d 149; Wright v. Ry. Co., 236 U.S. 674, 35 S.Ct. 471, 59 L.Ed. 781; Corporation Comm. v. Oxford Seminary Const. Co., 76 S.E. 640; Brown University v. Granger, 36 A. 720, 36 A. L. R. 847. The construction placed on Section 6, Article X, Missouri Constitution by the Legislature under Section 9743, Revised Statutes 1929, is entitled to great weight. State ex rel. O'Connor v. Riedel, 329 Mo. 616, 46 S.W.2d 131. (c) "Ownership" is the sole test of exemption from taxation as to property of a municipal corporation under Section 6, Article X, Missouri Constitution and Section 9743, Revised Statutes 1929. Section 6, Article X, Mo. Const.; Sec. 9743, R. S. 1929; State ex rel. Millis v. Fleming, 275 Mo. 509, 204 S.W. 1085; 61 C. J., p. 420, sec. 455; San Francisco v. McGovern, 152 P. 980; Otter Tail Power Co. v. Degnan, 252 N.W. 619; Church of The Holy Faith v. State Tax Comm., 48 P.2d 777; Egan Independent Consolidated Dist. No. 1 v. Minnehaha County, 270 N.W. 527; City of Wyandotte v. State Board of Tax Admin., 270 N.W. 211; Omaha v. Douglas County, 148 N.W. 938; Springfield v. Johnson, 37 P. 577; Teneck Township v. State Board of Tax Appeals, 164 A. 895; State v. Belleville, 39 A. 658; Portland v. Welch, 269 P. 868; Colorado Springs v. Fremont County, 84 P. 1113; Steward v. Denver, 202 P. 1085. Board of Education v. Blondell, 232 N.W. 375; State v. Burleigh County, 212 N.W. 217; Summer County Comnrs. v. Wellington, 72 P. 216; Webster v. Univ. of Calif., 126 P. 974; Alvis v. Hicks, 116 So. 612. (d) Real property acquired by a drainage district to protect its lien for delinquent assessments is devoted to a public use. A drainage district organized under the provisions of Article 1, Chapter 64, Revised Statutes 1929, exercises only statutory powers to promote health, sanitation and the reclamation of lands -- their functions are exclusively governmental. Sec. 10743, R. S. 1929; Holly v. Rolwing, 87 S.W.2d 651; State ex rel. Marshall v. Bugg, 224 Mo. 537, 123 S.W. 827. The exercise, by a drainage district, of its right to protect its lien for delinquent assessments is essential to its purpose and very existence. Secs. 10766, 11020, R. S. 1929; State ex rel. v. McKay, 227 Mo.App. 327, 52 S.W.2d 229; Robinson v. Ind. & Ark. Lbr. & Mfg. Co., 194 S.W. 870; Portland v. Multomah County, 50 P.2d 1145; Jefferson v. Curry, 71 Mo. 85. Where property is devoted to a public use its character is not altered because an income is incidentally derived therefrom; while it is held awaiting a favorable sale. Osceola v. Board of Equalization, 176 N.W. 284; Nasemond County v. Norfolk, 151 S.E. 143; Mechanics Bank v. City of Kansas, 73 Mo. 555.

Roy McKittrick, Attorney General, H. G. Waltner, Assistant Attorney General, and G. R. Chamberlin for respondent.

(1) A drainage district is not a municipal corporation except to the extent authorized by a statute creating it, giving and limiting its powers to organizing, establishing and creating a district with limited powers to-wit, acquiring right of ways and to levy, apportion and collect the taxes for carrying out the purpose of the district. Sec. 6, Art. X, Mo. Const.; Secs. 9743, 10766, 11020, R. S. 1929. (a) A drainage district organized under Article 1, Chapter 64, Revised Statutes 1929, is a limited municipal corporation with strictly defined and limited powers and privileges. Sec. 9743, R. S. 1929; State ex rel. Caldwell v. Little River Drain. Dist., 291 Mo. 72, 236 S.W. 15; State ex rel. Kinder v. Little River Drain. Dist. 291 Mo. 267, 236 S.W. 848. The court correctly held that the appellant acted in the capacity of trustee for the bondholders in holding and receiving the rents and profits of the lands acquired on tax sales, and not used exclusively in the discharge of its prescribed governmental functions. State ex rel. Dist. No. 8 v. McKay, 227 Mo.App. 329; Caldwell v. Little River Drain. Dist., 291 Mo. 81; St. Louis v. Wenecker, 145 Mo. 230; Wilson v. Drainage Levee Dist., 237 Mo. 48; 19 C. J. 761; State v. Englewood Township Drain. Dist. Commrs., 41 N. J. L. 157; Jackson v. Breeland, 103 S.C. 184. The court properly observed that in effect the drainage district is holding the land which it buys at its own tax sale and otherwise in trust for the bondholders. St. Louis v. Weneker, 145 Mo. 230; 19 C. J., p. 572, sec. 271, p. 761; 65 C. J., p. 212, sec. 1. The trustee's options are equitable while debtor's are legal. The trustee occupies a fiduciary relation but the debtor does not. Guardian Trust Cause v. Studdart, 36 S.W.2d 582. "65 Corpus Juris, page 214, section 2B defines it as one who holds the legal title to the trust property for the benefit of another." Lord Coke's definition of a use was "A confidence reposed in some other, not issuing out of the land, but as a thing collateral, annexed in privity to the estate of the land and to the person touching the land for which the cestui que use has no remedy but by subpoena in chancery." Quoted in Willey v. Hoggson Corp., 106 So. 412, 90 Fla. 343. Bouvier's Law Dictionary defines a trustee as one to whom property has been conveyed to be held or maneuvered for the benefit of another. The power to levy and to collect taxes does not carry with it the power to hold the land tax free and the one power is not complementary to the other. Drainage Dist. v. Hetlage, 102 S.W.2d 702. The State and county tax lien continues, as a matter of course if the property is taxable, and the statutes so provide. Sec. 11020, R. S. 1929.

Bohling, C. Cooley and Westhues, CC., concur.

OPINION

BOHLING

The Grand River Drainage District of Cass and Bates Counties, Missouri, is a corporation organized under Article 1, Chapter 64, Sections 10743-10808, Revised Statutes 1929 (Mo. Stat. Ann., pp. 3462-3530). Section 10766, Revised Statutes 1929 (Mo. Stat. Ann., p. 3494), authorizing drainage districts organized under said article to protect their lien for drainage taxes, was added as a new section to said Article 1 in 1927 [Laws 1927, p. 181]. Section 11020, Revised Statutes 1929 (Mo. Stat. Ann., p. 3659), relating to drainage and levee districts generally, was enacted in 1929 [Laws 1929, p. 178, sec. 1] and authorized such districts to protect their lien for drainage or levee taxes. Said Grand River District states it acquired the several tracts of land here involved under authority of said statutory provisions and that it holds the same tax exempt as a "municipal corporation." The real estate market being depressed said district has been unable to make a sale of said tracts at a fair price, and since their acquisition, has rented the tracts as farm land and applied the rentals received to the expenses and bonded indebtedness of the district. The Collector of Revenue presents no issue concerning said district's acquisition of or right to acquire said lands under said statutory provisions. He questions the right of said district to hold and use said lands tax exempt; and the sole...